Should I Get Attorney to Write My Will?

Drafting a will is an essential part of estate planning. Even though it’s vitally important, a recent survey from AARP revealed that two out of five Americans over the age of 45 don’t have one.

The Reflector’s recent article, “Things people should know about creating wills,” says that writing your wishes down on paper helps avoid unnecessary work and stress when you die. Signing a will allows heirs to act with the decedent’s wishes in mind and also will make certain that assets and possessions go to the right people.

Estate planning can be complicated, and that’s the reason why many folks turn to estate planning attorneys to make sure this important task is done correctly and legally. Here are some of the estate planning topics to discuss with your lawyer:

List of Your Assets. Create a list of your assets and determine the ones covered by the will and those that will have to be passed through joint tenancy on a deed or a living trust. For instance, life insurance policies or retirement plan proceeds will be distributed by the beneficiaries you named in each account.

Naming a Guardian. Parents with minor children should definitely designate the person or persons whom they want to become guardians if they were to die unexpectantly. They can also use their will to name a person who will be in charge of the finances for the children.

Remembering Your Pets. It’s common for pet owners to use their will to detail guardianship for their pets and to leave money or property to defray the cost of their care.  A pet trust is legal in most states and is the best way to leave money and name a caretaker for your pets.

Stating Your Funeral Instructions. Settling probate won’t occur until after the funeral. As a result, any funeral wishes in a will frequently aren’t read until after the fact.

Designate an Executor. This is a trusted individual who will execute the terms of the will. He or she should be willing to serve and be capable of executing the will.

Those who die without a valid will become intestate. This will result in their estate being settled based on the laws of where that person lived. A court-appointed administrator will have the authority to transfer the assets and property. This administrator is bound by the state’s intestacy laws and may make decisions that go against the decedent’s wishes. To avoid this, work with an experienced estate planning attorney to draft a will and other estate planning documents.

Reference: The Reflector (July 15, 2019) “Things people should know about creating wills”

 

Avoiding a Family Feud When Choosing a Power of Attorney

The challenge in tasking a family member or trusted friend is not just making sure they have the necessary skills, but to navigate family dynamics so that no fights occur says Considerable.com in the article “How to assign power of attorney without sparking a family feud.” Every family situation is different, but in almost all cases, transparency is the best bet.

Start by understanding exactly what is meant by power of attorney, how it functions within the estate plan, and how siblings can all be involved to some degree with the family’s decision-making process.

Power of attorney is a term that gives an individual, or sometimes, individuals, the legal authority to act on behalf of someone else. It is usually used when a person, usually a parent or a spouse, is unable to make decisions for themselves because of illness or injury. It must be noted that power of attorney relates to financial and legal decisions. There are methods to address making decisions for another person for their health care or end-of-life decisions, but they are not accomplished by the power of attorney (POA).

It should be noted that there is a distinct difference between power of attorney and executor of the estate. Power of attorney is in effect while the person who has granted the authority is alive, but unable to act on their own behalf. The executor of the estate assumes responsibility for managing the estate through the probate process. While they are two different roles, they are often held by the same person, usually an adult child who is responsible and has good decision-making skills.

There are different types of power of attorney roles. The most common is the general power of attorney, followed by the health care. The general power of attorney refers to the person who has the authority to handle financial, business or private affairs. If a parent grants power of attorney to one of their children, that child then has the authority to act on behalf of the parent.

Trouble starts if the relationship between siblings is rocky, or if major decisions are made without discussions with siblings.

It’s not easy for siblings when one of them has been granted the power of attorney. That means they must accept the inherent authority of the chosen sibling to make all decisions for their parent. The sibling with the power of authority will have a smoother path if they can be sensitive to how this makes the others feel.

“Mom always liked you best,” is not a sentence that should come from a 50 year old, but often childhood dynamics can reappear during these times.

Remember that the power of attorney is also a fiduciary obligation, meaning that the person who holds it is required to act in the best interest of the parent and not their own. If the relationship between siblings is not good, or there’s no transparency when decisions are made, things can get bumpy.

Here are some tips for parents to bear in mind when deciding who should be their power of attorney:

  • Understand the great power that is being given to another person.
  • Make sure the person who is to be named POA understands the entire range of responsibilities they will have.
  • The siblings who have not been named will need to understand and respect the arrangement. They should also be aware of the potential for problems, keeping their eyes open and being watchful without being suspicious.

Parents should discuss these appointments with their estate planning attorney. Their years of experience in navigating family issues and dynamics give the attorneys insights that will be helpful with assigning these important tasks.

Reference: Considerable.com (July 10, 2019) “How to assign power of attorney without sparking a family feud”

 

Who Should Be the Agent of My Power of Attorney?

It’s important to understand what a power of attorney is, how it factors into estate planning, and how sibling roles can differ and be shared at the same time.

Considerable’s recent article, “How to assign power of attorney without sparking a family feud,” gives us some idea how the power of attorney can work within a family and among siblings.

A power of attorney or POA is a legal document that allows one person to act on behalf of another, usually when that person is unable to make decisions for themselves for reasons of ill health.

Many people confuse a power of attorney role with the executor of the estate. Power of attorney authority is only in effect while the person who has granted the authority is alive. Once that person dies, the executor of the estate then assumes responsibility of seeing the estate through the probate process. They’re two very different roles, but they can be held by the same person.

The most frequently used is a general power of attorney. The general power of attorney is for management of financial, business, or private affairs. If a parent grants power of attorney to one of their kids, he or she has the sole authority to act on behalf of the parent.

The other siblings have to abide by the inherent authority of the sibling with the power of attorney to make decisions for the parent related to their business affairs.

It’s also important to understand that the power of attorney is a fiduciary obligation. This means the person who holds it must act in the best interests of the parent rather than their own. He or she must also comply with rules. Nonetheless, things can get sticky if there isn’t proper confidence among siblings or transparency when major decisions are being made.

We recommend that you appoint one agent as your power of attorney and then you may appointment an alternate agent. We do not recommend appointing joint powers of attorney.

Whether one or more are entrusted with power of attorney, communication and transparency are the key factors in avoiding painful situations in the family.  Contact an experienced estate planning attorney to discuss these important documents.

 

Reference: Considerable (July 10, 2019) “How to assign power of attorney without sparking a family feud”

 

How Can I Sell My Recently Departed Parent’s Home Without a Hassle?
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How Can I Sell My Recently Departed Parent’s Home Without a Hassle?

Much of the work fell on Carlson, then 28, since the other beneficiary was her older sister, who lives in New York City.

The Philadelphia Inquirer’s recent article, “With proper planning, selling a parent’s house can be a relatively painless process—or not,” says that after finding a real estate agent with estate sale experience, she learned about probate, as well as the local building codes and repairs that needed to be made.

She was even tasked with telling her father’s friend, who’d been bunking in the cabin, that he’d have to move out.

Coping with a death of a parent is challenging enough, but selling their home can be extremely stressful for children. It’s even worse, if they die without a will. Grieving family members may be ill-equipped to make decisions and a home can fall into disrepair. Siblings may also have emotional attachments to it and unrealistic expectations about the sale price.

The job can be difficult and long or relatively easy. It depends in large part on the heirs’ ability to ask for help and hiring a professional who knows the local housing market. Experts say the sooner the process starts the better. Parents can also take actions while they’re alive to help avoid complications. This discussion may be difficult and awkward but it’s worth it to be informed, so adult children are not scrambling while grieving. Here are some helpful tips:

  • Be certain that both parents have a will. Make sure that you work with an experienced estate planning attorney.
  • Be prepared to spend some money because there are costs associated with maintaining and selling the property.
  • The executor should change the locks to keep heirs out.
  • Ask a real estate agent to run a competitive market analysis and have an appraisal done by a licensed appraiser.
  • Designate a contact person so the executor can keep all heirs informed.

A big deterrent to selling a parent’s house is typically the emotional attachment of the children.  Experts say that while cosmetic fixes can pay off, more substantial improvements generally don’t.

There are also estate, inheritance, and income taxes that can impact the net sales proceeds. There’s a benefit to selling an inherited property, because when a property is inherited after a death, the property value is “stepped up” to fair market value at the time of the owner’s death. An experienced estate planning attorney can help you with estate, inheritance and income tax questions.

Reference: The Philadelphia Inquirer (June 22, 2019) “With proper planning, selling a parent’s house can be a relatively painless process—or not”

 

What Happens When Real Estate Is Inherited?

The number one question on most people’s minds when they inherit real estate, is whether they have to pay taxes on it. For the most part, people don’t have to pay taxes on what they inherit, unless they live in a state with an inheritance tax. There are tax forms to be filed, says the Petoskey News-Review in the article “The pros and cons of inheriting real estate,” but not every estate has to pay taxes.

The estate has to pay taxes on any gains or losses after the death of the decedent, if and when they sell the property. The seller will have either capital gains or capital losses, depending upon what the house was purchased for and what it sold for.

Let’s say that Mom purchased the house for $100,000, gave it to her children and then they sold it for $120,000. They have to pay capital gains on the $20,000. When someone dies, heirs get the step-up in basis, so they get the value of the property at the date of the decedent’s death. If mom bought the house for $100,000 and when she died it had jumped in value to $220,000 the children sold it for $220,000,n there would be no capital gain.

People who inherit property should have it appraised by an experienced real estate appraiser to determine the actual value at the date of death.  An experienced estate planning attorney will be able to recommend an appraiser.

One of the biggest disagreements that families face after the death of a loved one, centers on selling real estate property. Some families actually break up over it, which is a shame. It would be far better for the family to talk about the property before the parents die and work out a plan.

The sticking point often centers on a summer home being passed down to multiple heirs. One wants to sell it, another wants to rent it out for summers and use it during winters and the third wants to move in. If they can resolve these issues with their parents, it’s less likely to come up as a divisive factor when the parents die, and emotions are running high. This gives the parents or grandparents a chance to talk about what they want after they have passed and why.

Conflicts can also arise when it’s time to clean up the house after someone inherits the property. Mom’s old lemon juicer or Dad’s favorite BBQ fork seem like small items, until they become part of family history.

The best thing for families that are able to pass a house down to the next generation, is to start the discussion early and make a plan.

An estate planning attorney can help the family work through the issues, including creating a plan for how the real estate property should be handled. The estate planning attorney will also be able to help the family  plan for any taxes that might be due, so there are no big surprises.

Reference: Petoskey News-Review (June 25, 2019) “The pros and cons of inheriting real estate”

 

How Can Dads Make Sure Their Families are Protected?

Forbes’ recent article, “How Fathers Can Make Sure Their Families Are Financially Protected” suggests that fathers consider taking the following steps to ensure their families are protected. The same advice applies to mothers too.

Do you have enough life insurance? Be sure you’re adequately insured, so your family won’t struggle to pay the bills without your income. Many employees only have enough life insurance from work to cover a year’s worth of salary, which may be enough for some families. However, if your spouse can’t make the mortgage payment on their own, and if they would be unwilling or unable to sell the home, you might want to at least make sure you have enough life insurance to pay off the mortgage. Once you know how much you need, buy a low-cost term policy for the maximum length of time you might need the coverage.

Are your beneficiaries updated on retirement accounts, annuities and life insurance policies? This is an often overlooked issue. An outdated beneficiary designation could result in your ex-spouse inheriting most of your assets, your latest child being disinherited, or your family having to pay higher taxes and probate fees than is necessary.

Is your will drafted?  You need a will to name a guardian for your minor children in most states. It’s a good idea to have an experienced estate planning attorney  help you.

Are you organized? Keep a record of where everything and everyone is. You can draft an “In Case of Emergency” folder that has copies of your will, revocable trust, life insurance policy and a summary of brokerage and bank accounts. Let your family know where to find it. You should also share your passwords to your digital accounts.

As a parent, you have an obligation to care for the financial well-being of your family. Part of this is making sure they’ll be protected, even if you’re not around.

Reference: Forbes (June 16, 2019) “How Fathers Can Make Sure Their Families Are Financially Protected”

 

How Do I Talk About Money with My Elderly Parents?

Many experts say that you should have your affairs in order, before you turn 50. However, only half of us have a will by that age, according to a recent report by Merrill Lynch and Age Wave.

More than 50% said their lack of proper planning could leave a problem for their families.

CNBC’s recent article, “How to have ‘the (money) talk’ with your parents,” explains that, according to the study, just 18% of those 55 and older have the estate planning recommended essentials: a will, a health-care directive and a power of attorney.

To start, get a general feel for your aging parents’ financial standing.

This should include where they bank, and whether there’s enough savings to cover their retirement and long-term care. If they don’t have enough saved, they’ll lean on you for support.

Next, start a list of the legal documents they do have, such as a power of attorney, a document that designates an agent to make financial decisions on their behalf and a health-care directive that states who has the authority to make health decisions for them.

You should include information on bank accounts and other assets. You should also list their passwords to online accounts and Social Security numbers.

Next, your parents should create an estate plan, if they don’t already have one. When you put a plan in place for how financial accounts, real estate and other assets will be distributed, it helps the family during what’s already a difficult time. Having an estate plan in place keeps the courts from determining where these assets go.

While you’re at it, talk to your own children about your financial picture.

Many people think they don’t need to yet have the talk. However, the perfect time to have the conversation, is when you are healthy. This is the time when you should speak with an experienced estate planning attorney to discuss your assets and how to preserve them and not when you are ill or at the last minute say before surgery.

Here’s an encouraging fact: young adults who discuss money with their parents are more likely to have their own finances under control. They are also more likely to have a budget, an emergency fund, to put 10% or more of their income toward savings and have a retirement account. That’s all according to a separate parents, children and money survey from T. Rowe Price.

Having routine conversations about money and estate planning alleviates many expensive and stressful problems for families. An estate planning attorney can work with grandparents, parents and adult children to make sure that all of their family members are protected with an estate plan for each generation.

Reference: CNBC (June 30, 2019) “How to have ‘the (money) talk’ with your parents”

 

How to Design an Estate Plan with a Blended Family?

There are several things that blended families need to consider when updating their estate plans, says The University Herald in the article “The Challenges and Complexities of Estate Planning for Blended Families.”

Estate plans should be reviewed and updated, whenever there’s a major life event, like a divorce, marriage or the birth or adoption of a child. If you don’t do this, it can lead to disastrous consequences after your death, like giving all your assets to an ex-spouse.

If you have children from previous marriages, make sure they inherit the assets you desire after your death. When new spouses are named as sole beneficiaries on retirement accounts, life insurance policies, and other accounts, they aren’t legally required to share any assets with the children.

Take time to review and update your estate plan. It will save you and your family a lot of stress in the future.

Your estate planning attorney can help you with this process.

You may need more than a simple will to protect your biological children’s ability to inherit. If you draft a will that leaves everything to your new spouse, he or she can cut out the children from your previous marriage altogether. Ask your attorney about a trust for those children. There are many options.

You can create a trust that will leave assets to your new spouse during his or her lifetime, and then pass those assets to your children, upon your spouse’s death. This is known as an AB trust. There is also a trust known as an ABC trust. Various assets are allocated to each trust, and while this type of trust can be a little complicated, the trusts will ensure that wishes are met, and everyone inherits as you want.

Be sure you that select your trustee wisely. It’s not uncommon to have tension between your spouse and your children. The trustee may need to serve as a referee between them, so name a person who will carry out your wishes as intended and who respects both your children and your spouse.

Another option is to simply leave assets to your biological children upon your death. The only problem here, is if your spouse is depending upon you to provide a means of support after you have passed.

An experienced estate planning attorney will be able to help you map out a plan so that no one is left behind. The earlier in your second (or subsequent) married life you start this process, the better.

Reference: University Herald (June 29, 2019) “The Challenges and Complexities of Estate Planning for Blended Families”

 

A Will, Power of Attorney and Health Care Power of Attorney: Three Documents Everyone Should Have

These three documents combined allow you to designate who you want to be responsible for your well- being, if you are unable to communicate to others on your own behalf and name who you want to receive your property. Having a will, power of attorney and health care power of attorney are the foundation of an estate plan and peace of mind, says the article “Simple steps to peace of mind” from the Traverse City Record Eagle.

If you die without a will, your state has a plan in place for you. However, you, or more correctly, your family, probably won’t like it. Your assets will be distributed according to the laws of inheritance, and people who you may not know or haven’t spoken to in years may end up inheriting your estate.

If your fate is to become incapacitated and you don’t have an estate plan, your family faces an entirely new set of challenges. Here’s what happened to one family:

A son contacted the financial advisor who had worked with the family for many years. He asked if the advisor had a power of attorney for his father. His mother had passed away two years ago, and his father had Alzheimer’s and wasn’t able to communicate or make decisions on his own behalf.

Five years ago, the financial advisor had recommended an estate planning attorney to the couple. The son called the attorney’s office and learned that his parents did make an appointment and met with the attorney about having these three documents created. However, they never moved forward with an estate plan.

The son had tried to talk with his parents over the years, but his father refused to discuss anything.

The son now had to hire that very same attorney to represent him in front of the probate court to be appointed as his father’s guardian and conservator. The son was appointed, but the court could just have easily appointed a complete stranger to these roles.

The son now has the power to help his father, but he will also have to report to the probate court every year to prove that his father’s well-being and finances are being handled properly. Having a will, power of attorney and medical power of attorney would have made this situation much easier for the family.

Guardianship is concerned with the person and his or her well-being. Conservatorship means a person has control over an individual’s financial matters and can make all decisions about property and assets.

There is a key difference between powers of attorney and conservatorship and guardianship. The person gets to name who they wish to have power of attorney. It’s someone who knows them, who they trust and they make the decision. With conservator and guardianship, it’s possible that someone you don’t know and who doesn’t know your family, holds all your legal rights.

A far better alternative is simply to meet with an experienced estate planning attorney and have him create these three documents and whatever planning tools your situation calls for. Start by giving some thought to who you would want to be in charge of your life and your money, if you should become unable to manage your life by yourself. Then consider who you would want to have your various assets when you die. Take your notes with you to a meeting with an estate planning attorney, who will know what documents you need. Make sure to complete the process: signing all the completed documents, funding any trusts, retitling any accounts and finally, making sure your family knows where your documents are. This is a road to peace of mind, for you and your family.

Reference: Traverse City Record Eagle (June 23, 2019) “Simple steps to peace of mind”

 

Is Estate Planning Really Such a Big Deal?

Delaying your estate planning is never a good idea, says The South Florida Reporter, in the new article entitled “Why Estate Planning Is So Important.” That’s because life can be full of unexpected moments and before you know it, it’s too late. Estate planning is for everyone, regardless of financial status, and especially if they have a family that is very dependent on them.

Estate planning is designed to protect your family from complications concerning your assets when you die. Many people believe that they don’t require estate planning. However, that’s not true. Estate planning is a way of making sure that all your assets will be properly taken care of by your family, if you’re no longer able to make your decisions due to incapacity or death.

Without estate planning, a court will name a person—usually a stranger—to handle your assets and finances when you die. This makes the probate process lengthy and stressful. To protect your assets after you die, you need to have an estate plan in advance. You also need to address possible state and federal taxes. Your estate plan is a way to decrease your tax burdens.

With a proper estate plan, your final wishes for your assets will be set out in a legal document. With a will or trust, all of your assets will be distributed to your beneficiaries, according to your final wishes.

This will also save your family from having to deal with the distribution of your assets, which can become very complicated without a will. There can also be family fights from the process of distributing assets without a will.

It is also important to remember that if you do create an estate plan, you’ll need to update it every once in a while—especially if there’s a significant event that happened in your life, like a birth, a death, or a move. Your estate plan should be ever-changing, since your assets and your life can also change.

It’s vital that you work with an experienced estate planning attorney, who can help you draft the legal documents that will make certain your family is taken care of after you pass away.

Reference: South Florida Reporter (June 12, 2019) “Why Estate Planning Is So Important”